Defence Department can’t explain increase in costs

Canadian Department of National Defence can’t explain increase in costs

OTTAWA — The Department of National Defence cannot fully explain why defence spending jumped about 14% in the most recent fiscal year to $22.5-billion — including nearly $4-billion in March alone — as the government tries to rein in the deficit.

While the department has struggled to identify where the money is going, Defence Minister Peter MacKay Friday tried to summarize the spending hike, highlighting investments in military equipment, bases and treatment for the sick and injured.

Estimated defence program spending for fiscal 2012 (ended in March 31) rose by $2.8-billion over the previous year (to $22.5-billion, from $19.7-billion), according to the Finance Department’s Fiscal Monitor, released two weeks ago.

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A whopping $3.8-billion was spent on defence programs in March alone, a 55% spike compared to the year earlier period and just as Treasury Board president Tony Clement was urging bureaucrats to avoid “March madness” spending in the final month of the fiscal year.

The DND expenditures ratcheted up at the same time the combat mission in Afghanistan wound down. This has sparked questions from opposition parties about where the department is spending so much cash and why it refuses to release the information.

Postmedia News asked DND two weeks ago for details on the large spending increase. Officials say the information will not be available until the numbers are finalized in the fall.

“The April 2011 to March 2012 results presented in the March 2012 Fiscal Monitor are not the final results for the year as a whole,” DND spokeswoman Laura McIntyre said Friday in an email.

“The final year-end results … will be available in the fall.”

Liberal defence critic John McKay asked why Defence will not release the information.

“How does your spending go up 14% when you’re supposed to be in cutbacks?” he said Friday.

“Something ain’t quite right here. It’s virtually impossible to find out what has been going on there.”

Mr. McKay also questions why the department’s overall spending would increase in a year the Afghanistan combat mission, one of its largest expenses, came to an end and should have produced savings.

“Just when you think that you should be getting some sort of, if you will, Afghanistan dividend, you actually find yourself spending more money than you spent in the previous year,” he said.

“It makes no sense to me.”

Mr. MacKay said Friday, the cost increases are partly the result of purchases of new military equipment, but the bulk of DND spending is on salaries for soldiers and department staff.

“We’re doing major procurement investments and putting money into bases, programs. We’ve increased spending, of course, for the ill and injured,” he said.

“We’ve put in place a number of programs to support families across the country so these investments demonstrate our commitment to improve and expand upon the funding there for the Canadian Forces.”

Asked why DND is having so much difficulty explaining the spending increase, Mr. MacKay said, “I’ve just explained it.” He did not expand on his remarks.

His department has faced fierce criticism recently for its accounting practices, including from the federal auditor general for failing to fully disclose the government’s estimated costs of buying F-35 stealth fighter jets.

This spring, the auditor- general said the Conservative government would have known before the last election the F-35 program would cost at least $10-billion more than what DND was telling Parliament and the public.

The issue dates back to March 2011, when the parliamentary budget officer released a report weeks before the federal election that estimated the F-35 would cost taxpayers nearly $30-billion.

Defence maintained the stealth fighter would actually cost $14.7-billion, even less than the $16-billion budgeted for the program.

But the auditor-general found during his own analysis it had estimated as far back as June 2010 the total cost would be at least $25-billion.